The uncertainty-governance choice puzzle revisited

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Franziska König investigates the impact of uncertainty on firms' governance choices, addressing the unclear relationship that has persisted despite extensive theoretical and empirical research. Various theoretical frameworks offer conflicting implications; for instance, transaction costs economics (TCE) suggests hierarchical governance in uncertain situations, while real options theory (ROT) advocates for market-based solutions. Empirical studies have employed diverse operationalizations, yielding inconsistent results, which has left the strategic management literature unable to provide clear guidance on governance selection amidst uncertainty. König systematically tackles this theoretical and empirical challenge, significantly advancing the field. She proposes a formal, circumstance-based categorization of uncertainty-governance relationships that integrates different theoretical perspectives and resolves existing empirical discrepancies. By employing a multidimensional lens, she examines the contributions of TCE, Resource-Based View (RBV), and ROT, enhancing the understanding of governance choices in uncertain contexts. Additionally, she conducts a comprehensive review of the current state of empirical research in this area, offering valuable insights for both scholars and practitioners.